The Bitcoin technology is fast changing the financial sector, and the move to Cryptocurrencies by an Argentinian bank is a clear demonstration of this. According to the principal shareholders of Banco Masventas, the bank is seeking to drop from the SWIFT global network in favour of Blockchain technology. The move will affect the bank’s international payment system.
Is Bitcoin a viable replacement for SWIFT?
Jose Dakak one of the principal shareholders explained that the bank will execute the shift through a strategic alliance with Bitex. Bitex is one of the major providers that deal with cryptocurrency payment services in South America. According to Dakak, the bank is looking to outsource the conversion of bitcoin to fiat currencies. The currencies will then be sent to Bitcoin.
The move to abandon SWIFT for Bitcoin technology is aimed at reducing the costs that come with international transfers. The technology also removes the need for intermediary internal banks which is also an added cost. Dakak and his team noted that one of the first crucial initial steps that the bank took was to work closely with the Bitex team. This was instrumental in streamlining the implementation process. The cooperation between the two entities allowed for smooth transaction payments. This means that bitcoin payments recipients are able to smoothly make and receive the cryptocurrency transaction without any barriers. In the initial stages, the bank also moved to make Bitex one of their strategic partners, especially in the implementation process. This strategic partnership made it possible for the client’s abroad to receive the same services without boundaries.
The challenges with the SWIFT network
The SWIFT network has for a long time been utilized by the large financial institutions and banks. SWIFT is basically a messaging network which allows for information sharing across financial institutions.
When you send a payment from a bank the message is sent via the SWIFT network. The major challenge with the SWIFT network is that the messages have to be verified manually. On average, it takes about 3 business days to send and remit the transactions. This period can extend to five days if the payment is larger. In most cases, international payments are large and this can take up to one week to complete and remit the payments. The delay is the process is the main challenge with the SWIFT network.
The case for Bitcoin
Bitcoin is a viable alternative because it uses a flexible blockchain network. While it does not have a large capacity, it is robust. In addition to this, the blockchain protocol has a long-standing track record backed by active open source technologies. The Bitcoin network is also secure and transparent, making it a dependable financial network especially for international payments.
Other banks expected to follow suit
The move by the Argentinian bank has inspired others to go in a similar direction. We have seen and will continue to see banks initiate pilot projects to test the blockchain technology and its effectiveness in their financial transactions. This is a major endorsement and a demonstration that indeed the cryptocurrency is a good alternative and a long-term solution in the global financial sector.